Michael Spiegel, Global Head of Transaction Banking, Standard Chartered
Business-to-business (B2B) marketplaces are gaining momentum, accelerated by the pandemic and evolving technology. This trend is especially pronounced in Asia, where platforms such as Alibaba and Indiamart facilitate seamless online transactions between business sellers and their small and medium enterprise (SME) buyers.
In this interview, Michael Spiegel, Global Head of Transaction Banking at Standard Chartered, shares the emerging trends in B2B marketplaces and the potential opportunities on offer for corporates. He also delves into how transaction banking is evolving to support the growing end-to-end digital B2B flows that corporates are tapping on to transform their business models.
Why are B2B marketplaces an opportunity for corporates?
Following a slow start at the turn of the century, B2B e-commerce and marketplaces have been flourishing, driven by matured technology, a receptive attitude towards doing business online, and a robust payment infrastructure. It started with smaller firms transacting on third-party platforms.
We are now seeing larger corporations investing in the digital transformation of their supply chain by establishing their own proprietary e-commerce platforms and potentially bringing in third-party sellers to complement or enrich the platform offerings.
Marketplaces are growing exponentially, with many of the large companies creating proprietary platforms or marketplaces for their ecosystems
Today, Standard Chartered collaborates with large established marketplaces – the connector platforms – to offer them modular, API-ready, end-to-end solutions. We are also working with corporate clients to embed banking solutions for their own proprietary platforms and have done so with many clients across our footprint. We are also partnering with platform technology leaders such as KI Group and B2B payment fintechs such as Tazapay to support our clients’ B2B transformation journey.
Mapping user journeys and associated transaction flows on the new platforms are some of the areas that we are collaborating on with our partners. Our aim is to make the experience of our clients and our clients’ clients as seamless as possible. Therefore, we are looking into payments rails, holding, and moving liquidity, and financing solutions in the new ecosystems.
What are the emerging trends in B2B marketplaces?
The expansion of ‘many to many’ connector marketplaces, such as Alibaba, is on the horizon. Industry-specific marketplaces are also making a comeback. Additionally, there’s a rising interest in corporates digitalising existing supply chains and moving towards ‘one to many’ proprietary e-commerce platforms to better serve their ecosystems.
Modern technology accelerates platform and mobile app development, simplifying user experience and increasing digital adoption for clients, suppliers, and distributors. The emergence of APIs is a key driver behind the automation of business workflows and touch points, making business operations more efficient and more effective.
Furthermore, modern technology is simplifying ‘Know Your Business’ (KYB) checks and verifications, and normalising digital onboarding. Clients can unlock higher payment efficiency by enabling buyers and suppliers to self-administer their bank account data online and in real time.
What is your experience working with B2B marketplaces and what types of marketplaces have you worked with?
Standard Chartered actively banks several leading ‘many-to-many’ platforms, providing them with payment, collection, foreign exchange, and escrow services. We consistently seek partners who can complement our offerings, enabling us to deliver more advanced solutions to our clients.
A case in point is our recent partnership with B2B fintech Tazapay to co-create with our client WTX.com. Our client is a cross-border B2B marketplace for used trucks backed by Daimler Truck. The aim was to digitise existing sales distribution that is reliant on the use of letters of credit.
This collaboration offers payment, collection, foreign exchange, and digital escrow solutions that release payments to sellers upon the digital validation of shipping documentation, enriching the experience of online buyers and sellers on the WTX platform.
Do B2B marketplaces impact transaction banking models? If so, how?
B2B marketplaces are somewhat disrupting transaction banking models. The conventional role of banks as intermediaries is diminishing within the realm of B2B marketplaces. This evolving ecosystem demands enhanced collaboration across the industry.
Financing is another area B2B marketplaces are disrupting. Banks are accustomed to analysing clients’ financial statements and then providing financing. In B2B marketplaces, the focus is on funding flow-based commerce within the marketplaces, characterised by short-term and portfolio-driven dynamics. The extent of KYB scrutiny becomes a pivotal factor.
Issues such as fraud, dispute resolution and regulatory compliance are rapidly evolving in B2B marketplaces. The priority is to create a safe, secure, and sustainable business environment
How do B2B marketplaces handle issues such as fraud, dispute resolution and regulatory compliance, and why is the role of a bank important?
Issues such as fraud, dispute resolution and regulatory compliance are rapidly evolving in B2B marketplaces. Ultimately, marketplaces have to offer a safe and secure business environment. Those issues are much more prominent in ‘many-to-many’ platforms and less so in ‘one-to-many’ platforms, where parties transact directly with one known counterparty.
International banking institutions like Standard Chartered have a crucial role to play. Our extensive on-the-ground network enables us to help corporates and fintechs to navigate the regulatory landscape across diverse markets in Asia, Africa, and the Middle East.
How can banks collaborate with B2B marketplaces to create new products and services that meet the evolving requirements of their customers?
One area that Standard Chartered is very focused on is to embed an environmental, social and governance (ESG) framework in our solutions. B2B marketplaces can help elevate ESG awareness as the exchange of ESG-related data will become increasingly important in marketplaces, especially in the context of the ‘many-to-many’ business models.
We can also help think through how to digitise and automate some of the transaction flows. For example, we recently launched Payouts-as-a Service, a solution that allows us to co-create complex payment journeys with our clients by embedding the Bank into underlying commercial workflows.
When combined with other commerce enabling tools and technology such as QR codes, RFID, and NFC, B2B platforms can monitor the movement of goods across supply chains in real time, automate money movement (financing, collection, payments), and accelerate transition towards sustainable supply chains.
Read More: B2B marketplace opportunity is ripe for corporates